Fees involved when renting a shop.

[TCCuk]

We are looking at getting a retail shop in my local town and I a trying to work out how much it would cost, I know the obvious charges such as rent, utility bills etc

However what are the additional charges do you have to pay council tax? other charges just for having a shop? etc

Thanks

 

[PrestonLad]

For a start, go onto a local commercial estate agent website, and find the particulars for some shops similar to those you want to rent. This will give you an idea of rent... but also there should be quoted the rates payable (sometimes quoted as rateable value - say 8000..... and a current rate of, say 50p in the pound, meaning you pay 4000 per year). Rent and rates can vary massively - even over a distance of 100m - depending on where the retail hot spots are.

You need to pay professional fees at the outset, for drawing up contracts (and ongoing accountancy fees etc)
You'll probably have a lease where you are liable for upkeep and building insurance. In which case you should almost certainly get a survey done at the outset to agree on current condition. It is common for people to take on a shop.... spend money on it... but at the end of lease, find that the landlord insists on certain repairs doing to the roof or something - and you might be liable -so having a good survey at the outset... and keeping up a dialogue with the landlord throughout, can help avoid a lot of problems later.
Depending on whether your shop is in a shopping centre, you might need to pay a share of security / energy costs etc.
You will need a music licence if you want to play the radio/ music ... I think this is about 200 quid but depends on shop size.
You'll need insurance... including public liability.... perhaps to cover stock, or your illness etc... and as already mentioned, the building.
Probably a few other things I've forgotten! Hope that's a good start. Good luck

 

[TCCuk]

Thanks for that, I was wondering what the rateable fees are, they all seem really expensive, they seem to be nearly as much as the rent in some cases, what are these fees for? are these just local taxes you have to pay the council for having a shop?

 

[businessfunding]

Great answer from Preston Lad; Don't forget that as a new start you might be required to pay an advance rental and a security deposit.

 

[mhall]

You pay the Rates and get absolutely nothing in return. Don't forget to add on your Bank Charges and Credit Card Fees, Staff holidays and sickness, Waste Disposal. Total everything up and then add on another 25% just because you will have forgotten something

 

[TCCuk]

I don't think we will need any staff, I hoping to get away with waste disposal as we don't think we will have much of that, it will just be boxes and we could just take them to the local tip for now

Thanks for the comments everyone!

 

[Banned]

You can't "get away" with waste disposal no matter how little.

Anyhow, the one essential you absolutely must have without question is an unlimited broadband service.

 

[TCCuk]

Yeah, well I have a website too, so broadband will have to be added to the list as I can maintain the website during quite periods, then will need to pay for minor essentials which will all add up

 

[Esk247]

To be honest there is a LOT more to renting a shop than what has been mentioned in this thread.

You need a complete business plan JUST for the shop part. Forget the business plan if you're doing online, this is a completely different set of figures to get your head around.

Contingency fund, rates, how you're paying the rent is it quarterly in advance etc. You need to think about making offers on a property, getting a Solicitor (Commercial Law) to write up a contract etc. etc.

Seems that you'll need to do a lot more research in to all of this before signing on the dotted line. Even if you're Ltd it rarely seems to matter these days, everything to do with rents is personally guaranteed so if your rent is £12k per annum you WILL pay that no matter what happens.

Rates vary depending on a variety of factors. For a 12k rent you can pay as little as 3k rates, but sometimes pay as much as 9k rates! So get that checked first and ask about rate relief too!

 

[PrestonLad]

Thanks for that, I was wondering what the rateable fees are, they all seem really expensive, they seem to be nearly as much as the rent in some cases, what are these fees for? are these just local taxes you have to pay the council for having a shop?

No probs. I'm not speaking from years of experience... but I've been formulating my own business plan over recent months... and am just further down the line than you! Others have left good advice too. I too understand that you cannot get away with not paying for waste collection... it is mandatory to be registered with an approved waste removal contractor. I intend to follow advice that I've been given... as I won't produce much waste ... and I will approach nearby shops to try to co-operate with them. It is legal to club together to share costs of waste removal.

Rates are mega expensive, as you say. Taxes ares a fact of life. However I'm not sure that you "get nothing" for this money. In my town, the council funds many things that bring people into town - be it subsidised busses, street decoration, tourist information, events, street cleaning, street lighting etc.

 

[Talay]

Get a spreadsheet built up so that you can plug in the variables for a new property and see what comes out of the bottom. You should be able to drive out a break even figure, cashflow and all manner of things really.

Don't forget though that whilst trading through year one you need to accrue for lump sum payments due later.

 

[Banned]

r I'm not sure that you "get nothing" for this money. In my town, the council funds many things that bring people into town - be it subsidised busses, street decoration, tourist information, events, street cleaning, street lighting etc.

Rates go straight to central government, you district and town councils don't see a penny of it. You will find all those things you mention are funded either by the town council or local businesses/Chamber of Commerce - which basically means you will be asked to contribute to Christmas lights, street fairs, carnivals, jubilee events etc etc. Something else to budget for actually.

 

[Philip Hoyle]

I hoping to get away with waste disposal as we don't think we will have much of that, it will just be boxes and we could just take them to the local tip for now

That's against the law and the local council will hit you like a ton of bricks if you're found out. As a business, you need to be able to produce a "waste transfer note" (or similar wording) to prove that your trade waste has been disposed of properly/legally. Councils work on the assumption that every business produces waste, so their waste department may routinely ask to see waste transfer notes to prove where it goes. I was closely involved in one long drawn out argument between a tiny business and their local council as the business claimed to produce zero trade waste and it was a real up hill struggle to get the council off their backs.

 

[TCCuk]

Yeah I suppose, but its not like we are a cafe and provide loads of waste, I hope the cost of waste disposal isn't a lot. We have our business plan drawn up and we are currently applying for grants trying to raise a bit of cash, I don't think I want to jump straight in to getting a shop right now, we would only just be able to afford it and that would leave us with no bail out funds. Plus there might be further charges which we didn't anticipate which could really do us over.

 

[Hunnie]

Hi,
What if the business really produces no waste?
Surely the council can't charge you for this.

Hunnie

 

[fairdealworld]

Hi,
What if the business really produces no waste?
Surely the council can't charge you for this.

Hunnie

If the business claims to be producing no waste the Council will assume that actually it does and it is being disposed of illicitly e.g. into street litter bins, thrown onto verges or taken home and put in domestic bins.

If you have business premises you are going to have to pay for some sort of 'official' waste collection. Whatever I may feel about the costs of waste collection there really is no such thing as a business which produces no waste. The tea bag you made your morning cuppa with - and the packet the tea bags came out of - the paper tissues you use, the envelope that circular came out of and the circular itself which you don't want, the light bulb you've just had to change, the empty ball point pen, is all business waste when you create it inside business premises.

Any shop in particular will produce waste above and beyond the sort of thing I've mentioned above and there will probably be far more of it than someone who hasn't run a shop before will imagine.

I suspect that many small shops fail because of not taking all the unavoidable costs into consideration right at the start.

 

[Hunnie]

Hi,
Do home businesses have to pay this or do they just put their pens and tea bags in their household waste

We have never (yet!) been asked to pay anything for waste collection so hope we never are.

To the OP ; After rent and rates the highest bill we have is for water.
It is unmetered and costs £80 a month. We hardly use any so are wanting a meter but finding it difficult to arrange.

Regards
Hunnie

 

[fairdealworld]

Hi,
Do home businesses have to pay this or do they just put their pens and tea bags in their household waste

We have never (yet!) been asked to pay anything for waste collection so hope we never are.

To the OP ; After rent and rates the highest bill we have is for water.
It is unmetered and costs £80 a month. We hardly use any so are wanting a meter but finding it difficult to arrange.

Regards
Hunnie

Yes I assume home businesses do exactly that!

It is when you have identifiable business premises that you are hit or also, of course, if you drive a van. Until recently my only vehicle has been a van. At home even though I pay the community charge (or whatever domestic rates are calling themselves at the moment) I can't just turn up at the local Tidy Tip even though I want to get rid of things from my own home because vans are not allowed in without a permit. N.B. You can't park outside and walk into the Tidy Tip carrying your rubbish either - pedestrians are no longer allowed inside. I have to apply in advance for a permit listing every single thing I wish to deposit at the Tip and the application includes a warning that a check is kept on the sort of things you apply to deposit. When you arrive at the Tidy Tip you have to hand over your permit and the contents of your van are checked against the items listed on the permit.

To be fair the Council where I live sends the permits by return of post but the whole system is maddening especially when you are short of time and also when you can see householders pulling up in huge cars and 4x4s that hold more than my van and dumping their stuff at will.

I've just bought an old banger of a car as a back up for the van and it has only just occurred to me reading this thread today that now I've got a car I can go to the tip in that without a permit...

On the subject of water I find having a meter a great boon in my shop where water use is just for flushing the toilet, hand and dishwashing and the odd bucketful for cleaning shelves. I reckon to pay half what I would if I were paying water rates.

 

[kulture]

Never underestimate the cost of lighting and heating. It can be far far more than a household bill.

Also beware of costs you cannot control but come with the lease. Buildings insurance can be expensive, and since most leases say you pay it, but the landlord decides who insures, they have no incentive to shop around.

 

[kelvin1950]

Our waste/recycling works out at around £30 a month, shop around though.

No-one has mentioned small business rates relief, knocks ours down from £3k to £600 a year.

PDQ machine?

 

[Talay]

Never underestimate the cost of lighting and heating. It can be far far more than a household bill.

Also beware of costs you cannot control but come with the lease. Buildings insurance can be expensive, and since most leases say you pay it, but the landlord decides who insures, they have no incentive to shop around.

Surely people can work out that a 100w bulb uses 10 times more energy than a 10w bulb though ?

100 x 100w bulbs on for 12 hours a day 6 days a week is 100 x 100 x 12 x 6 x 52 / 1000 = 37440 units of electric which at 10p per unit would be £3744 plus VAT per year.

A good comment regarding the lease and insurance. In my experience, it is not uncommon for those arranging insurance to receive a commission or otherwise a kickback akin to the cashback available on insurance which people take out on their home or their car.

Unless insurance is proven to be cheap for your property, I would try to get a clause requiring open market estimates and comparable cover within say 10% of what you can find or you can use your own policy or if the landlord wants to retain the same insurers, the landlord pays the difference.